TMI Blog2016 (1) TMI 567X X X X Extracts X X X X X X X X Extracts X X X X ..... imb of the argument of the Ld. Counsel for the assessee that the sub contractors have furnished Form 15G and therefore there is no liability to deduct tax is concerned, we find the Ld.CIT(A) did not accept the additional evidences filed before him on the ground that assessee had not explained the reasons for non furnishing of the same before the AO. CIT(A) should not have rejected the additional evidences filed before him. Under these circumstances, we restore this issue to the file of the AO with a direction to examine the 15G forms submitted by the concerned sub-contractors and decide the issue as per fact and law after giving due opportunity of being heard to the assessee So far as the observation of Ld.CIT(A) that the assessee is not entitled to prefer an appeal before him since the assessee has admitted before the AO for such addition u/s.40(a)(ia) is concerned, we find the Hon’ble Bombay High Court in the case of Nirmala L. Mehta (2004 (4) TMI 43 - BOMBAY High Court) following the decision of the Hon’ble Supreme Court in the case of The Amalgamated Coalfield Ltd. Vs. The Janapada Sabha, Chhindwara [1962 (9) TMI 60 - SUPREME COURT OF INDIA ] has held that acquiescence to an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of ₹ 5,10,084/- pertains to the creditors outstanding as on 31-03-2007. Therefore, the net creditors outstanding as on 31-03- 2008 was only to the extent of ₹ 12,65,081/-. Relying on various decisions it was submitted that provision of section 40(a)(ia) of the Act is attracted only to the expenditure which is payable at the end of the year. Therefore, the disallowance, if any, can at best be made only in respect of outstanding expenses of ₹ 12,65,081/- relating to this year. 5. In his alternate contention it was submitted that since the sub contractors had furnished Form 15G, therefore, provisions of section 40(a)(ia) are not attracted. In support of the above proposition, the Ld. Counsel for the assessee relied on the decision of the Mumbai Bench of the Tribunal in the case of DCIT Vs. Rediff.com India Ltd. reported in 141 TTJ 647. However, since these copies of Form 15G were not produced before the AO, the assessee requested for admission of the same as additional evidence under Rule 46A of the I.T. Rules stating that there was no occasion to provide the same before the AO. It was submitted that even in the tax audit report also no contravention of the TDS p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent to sub-contractors by provisions of sec.40(a)(ia) of the I.T. Act, 1961. 2. Without prejudice to the above, the Ld.CIT(A) erred in law and on facts in not appreciating that provision of section 40(a)(ia) is attracted only in respect of payments which is actually payable as at the end of the year and not which is paid during the year. 3. The Ld.CIT(A) has further erred in law and on facts in not admitting the copies of Form No.15G as additional evidence within the meaning of Rule 46A of the I.T. Rules, 1962. 4. The appellant craves leave to amend or alter any of the grounds of appeal or add to the same, if deemed necessary. 9. The Ld. Counsel for the assessee referring to the following decisions submitted that provisions of section 40(a)(ia) are applicable only to the amounts payable at the end of the year : 1. M/s. Arcadia Share Stock Broker Pvt. Ltd. Vs. DCIT ITA No.1871/Mum/2013 order dated 22-12-2014 2. CIT Vs. M/s. Victor Shipping Services Pvt. Ltd. ITA No.122/2013 order dated 09-07-2013 3. ITO Vs. M/s. Theekathir Press ITA No.2076/Mad/2012 order dated 18-09-2013 10. So far as non admission of additional evidences are concerned the Ld. Couns ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ppeal. On further appeal by the assessee the Tribunal also dismissed the appeal. Under these circumstances the Hon ble High Court held that the appeals to the AAC and ITAT were incompetent. 14. Similarly, in the case of Mahesh B. Shah and Another (Supra) the assessee as a Member of Cochin Stock Exchange made contributions to the stock exchange funds. This amount though claimed by the assessee as a revenue expenditure incurred wholly necessarily and exclusively for carrying on business was not accepted by the AO and the assesssee himself ultimately agreed for treating this amount as capital expenditure. Accordingly, the said contribution amounting to ₹ 1,07,461/- was added to the assessee s total income for the year 1993-94. A sum of ₹ 42,539/- was added on the same basis to the assessee s total income. The assessee filed a revision petition against these orders. Before the CIT the petitioner agreed that this was a voluntary contribution to a capital fund and could be disallowed and added back to his income. The CIT in revision u/s.264 of the I.T. Act confirmed the order of the assessment for the period 1992-93 and 93-94. The Hon ble Kerala High Court dismissed the Wr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... isallowance u/s.40(a)(ia) should not exceed the amount of outstanding as at the end of the year which in the instant case is ₹ 12,65,081/-. The same has been arrived at by the assessee after excluding the amount of ₹ 5,10,084/- pertaining to the creditors outstanding as on 31-03-2007 from the total outstanding creditors of ₹ 17,75,165/- as on 31-03-2008. 18. The second limb of the argument is that the sub-contractors had furnished Form 15G for no deduction of tax, therefore, the provisions of section 40(a)(ia) are not attracted. 19. So far as the first limb of argument that the liability u/s.40(a)(ia) is restricted to the amount outstanding at the end of the year is concerned, the Pune Benches of the Tribunal following the decision of Hon ble Calcutta High Court and Hon ble Gujarat High Court are consistently taking the view that provisions of section 40(a)(ia) are attracted to the whole amount incurred as expenditure during the year on which no tax has been deducted. The same is not restricted to only the amount payable at the end of the year. Therefore, the first limb of the argument by the Ld. Counsel for the assessee is rejected. 20. So far as the sec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... missioner under sub section (4) of section 250 being a quasi judicial power, it is incumbent on him to exercise the same if the facts and circumstances justify. If the Appellate Assistant Commissioner fails to exercise his discretion judicially, and arbitrarily refuses to make enquiry in a case where the facts and circumstances so demand, his action would be open for correction by a higher authority. 21. Respectfully following the above decision of the jurisdictional High Court we are of the considered opinion that the CIT(A) should not have rejected the additional evidences filed before him. Under these circumstances, we restore this issue to the file of the AO with a direction to examine the 15G forms submitted by the concerned sub-contractors and decide the issue as per fact and law after giving due opportunity of being heard to the assessee. 22. So far as the observation of Ld.CIT(A) that the assessee is not entitled to prefer an appeal before him since the assessee has admitted before the AO for such addition u/s.40(a)(ia) is concerned, we find the Hon ble Bombay High Court in the case of Nirmala L. Mehta (Supra) following the decision of the Hon ble Supreme Court in th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y of law. Acquiescence cannot take away from a party the relief that he is entitled to where the tax is levied or collected without authority of law. The Constitution Bench of the Supreme Court in Amalgamated Coalfields Ltd. v. Janapada Sabha, AIR 1961 SC 964, held thus (page 965) : It may be stated at the outset that the tax now impugned has been imposed by the local authority from March 12, 1935, and that the first occasion when its validity was attacked was in only 1957, though if the petitioners are right in their submissions their acquiescence might not itself be a ground for denying them relief. Before however we set out the points urged by the learned Attorney-General in support of the petition, it would be convenient if we narrate briefly the history of the levy of this tax. The Supreme Court, thus, held that acquiescence to an illegal tax for a long time is not a ground for denying the party the relief that he is entitled to. In the instant case, therefore, it may be held that merely because the petitioner offered the prize money won in the lottery of the Sikkim Government, to tax under the Income-tax Act, 1961, that shall not take away her right in contending t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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